You already know that you must have a signed contract before you begin work. But what should that contract say?

Since we’re in our Getting Paid series, we’ll discuss four provisions that you must include in your contracts to ensure that you get paid. And one of these provisions will even allow you to engage an attorney without worrying about cost in case you need help collecting from a soon-to-be-former bad client.

These provisions may help with other issues as well, and there are, as you might guess, other contractual provisions that don’t necessarily relate to getting paid. We’ll discuss those in a future article.

For now, here are the four provisions that will ensure that you get paid.

Compensation. Okay, a little obvious, right? But there is more to this provision than just how much you get paid. You also need to include a retainer, late fees and kill fees.

As you know, I’m a proponent of the Replenishing Retainer. Use it, and you will waive bye-bye to your cash flow problems. Don’t use it, and you’ll be chasing clients for your money. It’s that simple.

In addition, your compensation provision must include late fees in case a client fails to pay on time, and “kill fees” if the client cancels the project after you’ve begun work.

A late fee is straightforward. If the client doesn’t pay on time, an additional fee is tacked on to the outstanding amount due.

A kill fee kicks in when a client “kills” a project after you start working on it. You’re entitled to compensation for the time you spent on the “killed” project.

Kill fees should also take into account your opportunity costs. In other words, but for your work on the “killed” project, you could have been working on other projects.

Scope of Work. Your contract must include a description of the specific deliverables you will provide and when. It must also state that the contract does not include any additional work beyond what is described in the contract.

How does this relate to getting paid? A scope of work provision not only ensures that a project won’t balloon out of control. It also ensures that when you present the deliverable you will get paid because that deliverable clearly conforms to the description of the scope of work.

Also, if you work on a flat rate, disputes relating to the scope of work can cause your effective rate — and profit — to deteriorate precipitously. BUT, if you have this provision in your contract, you won’t be forced to do additional work. Plus, if the client wants you to do additional work, then that work needs to be addressed in an additional contract with an additional fee.

Which leads us to…

Entire Agreement/Merger Clause. This is a clause that states that the parties’ entire agreement is contained within the signed contract. This isn’t an obvious “getting paid” provision either. But it’s critical.

With this provision, the entire agreement between the parties is contained within the contract. And the client can’t bring anything else into the contract.

For example, if you deliver the work product, and the client says, “I was expecting ______ based on the discussion we had on (date before you signed the contract),” or if you submit an invoice and the client says, “Wait, we agreed to (a price that isn’t identified in the contract),” you can point to the entire agreement/merger clause. And then you can point to the client’s checkbook and tell them to pay up.

Attorney’s Fees and Costs. Many times, the cost of taking legal action is a barrier to freelancers.

For example, if a client owes you $350.00 and refuses to pay, your legal costs will eat up most, and more likely all, of what the client owes you.

However, this provision will allow you to collect not only the $350.00, but your attorney’s fees and costs if you prevail. So, if a client doesn’t pay, you don’t have to worry about the cost of hiring an attorney, or even the filing fee for a small claims court matter (in which case you may be able to represent yourself).

And, just having this provision in your contracts can deter a client who may think about stiffing you.

So there you have it. Four essential provisions to include in your contracts to ensure that you get paid.

I almost forgot – one more thing. If the client doesn’t want to enter into a contract. Or balks at having any of these provisions in your contract, run away! Fast!

It can be tough though. Especially if you are just starting out and trying to build a business. You will be tempted to take anyone who walks through the door. But you have to be selective.

And, confession time, I still have issues with problem clients. Maybe my business slowed down and I became crippled with the irrational thought that no one else is going to walk through the door. Or I hit it off with a client in the beginning, but then things went bad.

No matter the reason, everyone has dealt with problem clients. But you have to get rid of them. As quickly as possible.

Heck, I’m a lawyer, and it’s really hard for lawyers to “fire” clients, especially if you’ve appeared in a case for them. But I do get rid of them. And when I do, I find that my income goes up, my stress goes down, and the world is a more beautiful place.

Also, I’m sure that the ability to pick and choose who you work with is one of the reasons that you started your own business. It was for me. So it’s no use working for problem clients.

Problem clients will make demands on your time and not want to compensate you for it. They will call you on holidays or after business hours when you are spending time with your family. You’ll do a great job for them and they’ll still find something to complain about. Usually with the intent to get you to reduce the rate you quoted them. They’ll also take months to pay your invoice, if they pay at all.

And, when you have to chase payment, you’re worse off than if you had never met that client. Sure, they may pay you some money, but you probably spent so much additional time trying to collect, that the money you’ve received isn’t worth the time and effort that you put into the work.

Plus, there are other clients — your ideal clients — that you could have been working with while you were dealing with the client from hell.

So how do you avoid clients like this?

First, trust your gut. Seriously. I’ve found that the clients that are the most hassle are the ones that I had a gut feeling about from the beginning.

But, there will be times when you think that the client is perfect for you, and then they turn out to be the worst. This doesn’t happen as frequently, but it does happen. And that’s where your contract comes in.

You need to have provisions in your contract that allow you to kill it if necessary. That way, if things start to go bad, you have an out.

You also need to have provisions in your contract that will assist you to collect any money that the client owes you. This includes a provision for attorneys’ fees and costs if you are forced to sue to get paid.

And you should never begin work without a Replenishing Retainer. With that retainer, the client can’t stiff you. Which means that you may not have to sue the client if the retainer will cover what they owe you.

So, what have we learned? Trust your gut and don’t get involved with a client in the first place. But if you do get involved with a problem client, make sure that you have provisions in your contract to allow you to kill it and recover attorneys’ fees and costs. And always get a retainer. Always.